The 1720 French financial bubble centered on John Law’s Mississippi Company was the Mississippi Bubble.
John Law, a Scottish financier, became influential in France after proposing a bank and paper-money system designed to support economic growth and reduce the burden of government debt. His Mississippi Company held a monopoly over French trade with territories connected to the Mississippi River, especially Louisiana.
Investors bought shares in Paris, and expectations about American wealth drove prices sharply upward. The company’s shares became detached from realistic commercial returns. When confidence in the paper-money and share system weakened, holders tried to convert assets into more reliable forms of wealth, producing a dramatic collapse in 1720.
The Mississippi Bubble is commonly paired with Britain’s South Sea Bubble because both peaked in the same year. The episode also illustrates the danger of combining a trading monopoly, aggressive monetary expansion, and speculative expectations.